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The Best Reason to Take Social Security Long Before Age 70

By Sam Swenson, CFA, CPA - Apr 14, 2021 at 5:05AM

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Many situations call for an early start to payments.

The decision to take or delay Social Security is dependent on your total financial picture. Those who want a higher monthly paycheck may choose to wait until age 70 to take their benefits, while others might be counting down the days to their 62nd birthday when they'll immediately claim their checks. 

Keep in mind that the average monthly benefit at 62 is in the neighborhood of $1,500 per month. For every year you delay taking Social Security, your benefits will increase by about 8% until you turn age 70. Given that this increase in benefits will last as long as you live, it's really important to consider your entire financial situation before making any rash decisions. 

Situations that call for an early start

If you find yourself in any of the below scenarios, it may be worth starting Social Security payments at 62:

  • You are in poor health. It may take until your early 80s to make delaying Social Security "worth it," and if you are not well, it's smart to begin the payments sooner. This ensures you will be able to enjoy your hard-earned benefits. 
  • You need or want the extra cash flow. It's your money, after all. You have every right to enjoy the money the minute you're due to receive it. Many people simply need the money to cover living expenses, and there's no shame in that. 
  • You don't plan to rely on Social Security in the long term. Say you have plenty of money, and Social Security is nothing more than a rounding error in the scope of your financial life. You might claim payments earlier to finance luxuries or a side business while the rest of your assets grow seamlessly. 

What this boils down to is actually pretty simple: If you have a specific use for the money and you're willing to trade lesser benefits down the line to accommodate that specific use, take Social Security on the earlier side. 

Drawing of a man holding golden parachute.

Image source: Getty Images.

Broader retirement considerations

Again, the decision to take Social Security is extremely personal. If you've waited many years to reach age 62 in anticipation of immediately claiming benefits, it would feel miserable to be told you have to wait another three to seven years before you should claim paychecks. More money is not always the answer, and some people want to retire as soon as they can.

This discussion provides a perfect moment to reiterate the importance of growing your personal retirement savings. To the extent you can, simply saving a few thousand dollars a year throughout your working life can make a tremendous difference when it comes to the later decision to claim Social Security.

If you're still many years from retirement, fully funding your employer-sponsored plan, like a 401(k) or 403(b), along with maxing out your Roth IRA, will make your life infinitely easier when you get older. Recurring contributions in tax-advantaged accounts will unlock the power of compounding and will probably make things easier in the long run. 

This is all to say that if you really do need or want the money now, or if Social Security is inconsequential to you in the long run, don't hesitate to go for it at 62. 

A difficult decision that can be made easier

Depending on how old you are, you might be able to make Social Security irrelevant to your financial plan, which is a smart goal. Relying on Social Security trust fund reserves is a tenuous gamble, one that may or may not work out in the long run. That's why it's best to protect yourself by sticking as much as you can in tax-advantaged investment accounts as soon as possible. When you do finally claim benefits, do it after a thorough examination of your life in its totality.

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